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THE PURSUIT OF AN AUDIENCE: ANALYZING STRATEGIES AND PROCEDURES ASSOCIATED WITH ARTS ORGANIZATIONS OFFERING DISCOUNTED TICKETS Presented In Partial Fulfillment of the Requirements For The Master of Science and Arts Administration Drexel University By Kristin N. Allard, B.A. Drexel University 2012 Approved by Roy Wilbur Advisor Graduate Program in Arts Administration i ABSTRACT Arts participation has experienced a significant decline since 2008. In order to fill seats and encourage patron attendance, many performing arts organizations have offered free and discounted tickets to their performances. Some believe that discounting is an innovative way to expose their art to new audiences and generate revenue. Others believe that discounting devalues the artistic product and teaches patrons to wait for a discount before paying full price. I analyzed both perspectives of this argument and examined cases of successful and unsuccessful discounted efforts. To that end, the following analysis aims to synthesize these findings on the topic of discount ticket offerings as it applies to strategic execution, audience development, and organizational sustainability. Established with data collected through extensive research and interviews, organizations that utilized a predetermined structure through which to offer discounts reported a higher rate of success than those that did not. Without a set strategy in which to offer discounts, results will be erratic and unable to predict, which many organizations did not prefer. ii ACKNOWLEDGEMENTS I’d like to thank everyone who assisted in the completion of my research. For those who provided a year of moral support, I’d like to thank Katie Carmichael, Nathan Shapiro, Emily Vernon, and my mom. I would also like to thank Danielle Swan for responding to my numerous emails about thesis guidelines and deadlines. I would not be graduating without her! I wish I could individually thank every person that guided my thesis research along the way, whether it was through a quick discussion or an email response. I am especially grateful for the fourteen people that took time away from their busy schedules to be part of my research and interview process. I appreciate your time infinitely and hope this analysis will prove beneficial to your organization’s future discounting endeavors. Lastly, I must extend my deepest gratitude to my thesis advisor, Roy Wilbur, who stuck by me throughout the past year while I worked on my thesis. Roy always found time for me and without his help, I would still be deliberating my thesis topic. I owe all of the success I’ve had with this thesis and degree to him and will forever be grateful of his guidance. iii TABLE OF CONTENTS ABSTRACT.................................................................................................................... ii ACKNOWLEDGEMENTS ........................................................................................... iii TABLE OF CONTENTS............................................................................................... iv INTRODUCTION .............................................................................................................. 1 CHAPTER ONE- INTRODUCTION TO THE ORGANIZATIONS RESEARCHED ..... 8 CHAPTER TWO- THE HALF-PRICE PROGRAM ....................................................... 17 CHAPTER THREE- THE THEATRE COMPANIES’ USAGE OF THE HALF-PRICE PROGRAM ....................................................................................................................... 22 CONCLUSION ................................................................................................................. 34 APPENDIX A ................................................................................................................... 37 WORKS CITED ............................................................................................................... 39 iv INTRODUCTION In the performing arts industry, only 50% of all single ticket buyers return to an organization to see another performance (Arts 2007). According to an arts participation study conducted by the National Endowment for the Arts, all disciplines within the performing arts experienced a decline in audience participation from 2002-2008. Those with the largest rate of decline were classical music at 17%, ballet at 21%, jazz at 26%, and opera with a staggering 34% decline in audience attendance (Williams and Keen 2009). Current economic barriers are hindering the growth in audience attendance of many nonprofit performing arts organizations, making sustainability a serious challenge. As a result of these challenges, some companies are choosing to offer discounted tickets to the community they serve as a means of both attracting new audiences and filling empty seats—two fundamental goals that are imperative for any company to achieve. Current findings indicate that there are divided opinions in the artistic community regarding the relationship between offering discounted tickets and audience retention. Some companies that offer free tickets have documented success with audience retention for example, Free Night of Theatre (FNOT)— a program initiated by the Theatre Communications Group (TCG) to promote 1 audience development in theatre communities throughout the nation. In 2007, program-wide statistics indicated that out of those who attended, 44% returned to a theatre that same season as a single ticket buyer and 4% as a subscriber (Shugoll Research 2007). In their 2007 initiative, all 120 participating regions reached their audience development goals by offering free theater tickets to the community. The Shugoll report states that out of 3,058 respondents of a nationwide survey, 65% of participants attended a performance at a theatre company they had never been to before. Also, 80% have gone to a theatre program within the region since attending FNOT, 85% saying they attend the theatre more because of their experience with the program. From the study, three strategies were also identified to guarantee future audience retention: do not let walk ups walk away; help new audiences feel like part of the family; and invite audiences back immediately. There are many examples of non-profit arts organizations offering discounted tickets for their programs in order to develop relationships with new audiences. The Signature Theatre Company in New York City has been offering $25 subsidized tickets, through sponsorship with Time Warner, to all of their productions since 2005 and has seen positive results with regards to changes in audience demographics (Isherwood 2007). The Sledgehammer Theatre Company in Chicago offers a season pass that allows audiences to pay a one-time fee of $49.95 to attend as many performances as they want throughout the season. Single tickets normally cost $25 per ticket. (Sledgehammer n.d.). The San 2 Francisco Opera offers Opera-in-the-Ballpark every fall in AT&T Stadium, where they present a free live simulcast of their season-opening production. The organization’s Marketing Director, Marcia Lazer plans every aspect of this event strategically to ensure each audience member is tracked and contacted following the performance. In 2009, the company set an attendance record of 27,000 attendees for their annual simulcast (Wiegand 2009). Data showed that $880,000 in ticket revenue was generated the following season solely from those who attended (Borzo 2010). Since Groupon’s launch in 2008, many organizations have also been taking advantage of daily deal sites, which offer daily discounts to various types of local and national businesses through e-blasts and their websites. In less than three years, Groupon has become the top-selling daily deal website in the world1 (Freed 2011). Groupon strives to connect businesses with new consumers through discount opportunities- a strategy that many organizations are trying to take advantage of. According to a recent study surveying 22,000 online shoppers using such sites as Groupon, Living Social, and Google Offers, 31% of buyers are firsttime customers and 27% are infrequent (Freed 2011). Even such Broadway productions as La Cage aux Folles offered Groupon deals in 2010, selling over 1,500 tickets (Cox 2011). 1 Groupon has experienced financial issues since the company went public in 2011. Shares were as high as $31 in November 2011 yet recently dropped as low as $3.00 this past November (Pavlo 2012). Though the company’s third quarter has been referred to as a “colossal disaster,” Groupon claimed to end with 39.5 million active subscribers (Korn 2012). 3 There are segments of new customers that organizations are able to engage through strategic ticketing discounts. This includes patrons who are reluctant to risk spending money for an event they assume may be uninteresting, as well as those who are disinclined to attend the arts in general (Cameron 2005). Neither of these situations should be a factor keeping potential audiences away. Offering free and discounted tickets is a way to invite the “disinclined” patron. “If we truly seek to engage the “unengageable,” it will be a long and difficult process from which we may not see a short- or even midterm impact. But it is absolutely necessary” (Lord 2009). Another major analysis that identifies strategies for offering discounted tickets with the intention of garnering audience retention is What, me discount?, a piece commissioned by the Alliance of Audiences (Alliance for Audiences n.d.). The study asserts that convincing a customer to attend an event is the first step in gaining retention, but stresses the importance of developing a strategy to further communicate and build relationships with each individual audience member. The Alliance of Audiences explains that the goals driving administrators to develop their audiences are all long-term, focusing on the future success of the organization. These goals include, but are not limited to: financial stability through ticket sales; programming excellence in support of the artistic mission; community engagement that furthers the message of the organization; and wordof-mouth marketing, the single most valuable marketing tool within the performing arts (Alliance for Audiences n.d.). 4 Arguments against discounting, however, suggest that though offering discounted tickets may increase the size of your audience, participants do not give as much value to items that they do not pay for (Anderson 2010). Marketers are specifically wary of discounts because they feel that potential audiences will expect discounts every time and delay their purchasing while waiting for discounts (Alliance for Audiences n.d.). Free and discounted offers may also signal that a performance is not popular or worse, it can devalue the artistic product or the organization itself. Another perception is that the majority of people who attend free performances are those who would be attending regardless of the cost. Though not specifically related to the performing arts, in “Free is a Magic Number,” Tim Baker uses the example of free days or “pay what you can” programs at museums. He also discusses a program in the United Kingdom, A Night Less Ordinary, which demonstrates a similar premise to FNOT but indicates that only 8% of participants were new to the theatre (Baker 2011). Though the rate of attendees may increase, it’s suggested that the organization is simply giving a hand out to those who are able to pay the original cost of the ticket In Free: The Future of a Radical Price, Chris Anderson makes the point that offering products for free can ultimately increase the size of your audience enabling organizations to market to more people, as well as identify new 5 audiences. Anderson acknowledges, however, the notion that people do not care for things that they do not pay for (Anderson 2010). This issue is frequently seen in the performing arts industry, specifically in regards to free, or complimentary, tickets. FNOT also touched upon this being a huge issue, explaining that free tickets typically result in the highest rate of no-shows at performances (Shugoll Research 2007). Both for-profit and non-profit organizations have access to numerous outlets through which they can provide discounts for their offerings. Some choose to use larger discounting companies that have access to a broad customer base. Others create discount programs internally that are offered through the organizations themselves. Whatever means of attracting customers through discounts, organizations must think strategically about how to use these outlets. A poorly designed campaign can do serious harm to a business’s profit margin (Rajan 2012). Therefore it is imperative for artistic organizations to understand the different programs available before deciding the best strategy for offering discounts to their audiences. As previously indicated, there are many opposing opinions on the concept of offering discounted tickets for arts and culture events. To that end, the following analysis aims to synthesize these findings on the topic of discount ticket offerings as it applies to strategic execution, audience development, and organizational sustainability. Results from this analysis were taken directly from 6 research gathered by interviewing organizations implementing half-price ticket programs throughout the east coast. This analysis hopes to provide strategies and principles in which to offer half-price tickets in order to seek new audiences, maintain relationships with current patrons, and eventually track audience retention. 7 CHAPTER ONE- INTRODUCTION TO THE ORGANIZATIONS RESEARCHED In preparation for this analysis, I collected data from three cultural alliances based in cities on the east coast, each organization offering similar halfprice ticketing programs for their members. The organizations studied include the Greater Philadelphia Cultural Alliance (GPCA), ArtsBoston, and the Cultural Alliance of Greater Washington (CAGW). Interviews were conducted with the program coordinators at each cultural alliance to gain a greater understanding of their specific ticket program, the make-up of their members, and the various benefits that they offer. Three member organizations from each cultural alliance were then selected to further explore each half-price program and how it was being utilized. To ensure consistency, this research focused specifically on theatre companies, representing a wide range of organizational capacity, audience base, and discount usage. Philadelphia GPCA, founded in 1972, “is the region's premier leadership, advocacy, and audience development organization for arts and culture” (Greater Philadelphia Cultural Alliance 2004-2012). A membership-based service organization, GPCA serves over 400 arts and culture organizations, and strives to 8 “connect cultural resources to community needs; provide direct services for nonprofit cultural organizations; produce direct marketing programs for cultural consumers and lead cultural research, advocacy and policy work (Greater Philadelphia Cultural Alliance 2011).” Funsavers, is provided by GPCA as the main outlet through which its members provide ticket discounts. Funsavers is a weekly e-mail that provides week-of, half-price ticket discounts to members of the Philadelphia community. This initiative began over 10 years ago in order to increase arts and culture participation throughout the region. Those who receive these emails must sign-up to be on the distribution list; but as of October 2011, over 100,000 people have received the weekly e-blast (Greater Philadelphia Cultural Alliance 2011). Organizations that are members of GPCA can offer discounts through this program for any event, free of charge. All half-price offerings tickets are assigned a promotional code and tickets are sold through the individual organization’s box office. The three participating theatre companies interviewed from the Philadelphia region were Flashpoint Theatre Company, Bristol Riverside Theatre, and Walnut Street Theatre. Flashpoint is a relatively new member of Philadelphia’s theatre scene. Started in 2003, it focuses on new and contemporary works that promote cultural arts awareness (Flashpoint Theatre Company 2010). They have produced 12 Philadelphia premieres and one world premiere 9 throughout its history, along with other works. Flashpoint is housed in the Adrienne theatre’s second stage which is an intimate 55-seat space. Currently celebrating its 25th season, Bristol Riverside is a professional regional theatre located north of Philadelphia in the city of Bristol (Bristol Riverside Theatre n.d.) in a renovated movie house that has a 300-seat capacity. Devoted to presenting original, contemporary, and classic works each year, Bristol Riverside’s current season includes five main stage productions. As the oldest Theatre in America, the Walnut Street Theatre recently celebrated its 200th anniversary in 2009 (Walnut Street Theatre 2009-2012). A National Historic Landmark located in the Center City district of downtown Philadelphia, it also celebrates having the largest subscription audience in the world totaling 56,000 subscribers. Between the main stage and black box theatre, the theatre presents over 20 productions each season, holds 600 performances, and currently has two productions on tour. Boston ArtsBoston has been dedicated to connecting the Boston community and visitors with local arts organizations for over 35 years. Serving over 170 arts and culture organizations, ArtsBoston strives to help its members “grow audiences, provide strategic and capacity-building resources, and serve as a collective voice for the arts (Boston 2012).” With a mission dedicated to audience awareness and 10 development, ArtsBoston has offered half-price tickets to its community since the organization’s inception. Inspired by New York City’s TKTS booth, ArtsBoston initially created BosTix—a half-price, day-of-show ticket program that has two booths for inperson sales only. BosTix booths are located in Faneuil Hall Marketplace (on the Freedom Trail) and Copley Square, both convenient, popular areas of downtown Boston. ArtsBoston then created a second half-price outlet that offers advanced ticket purchase opportunities online. BosTix also has an email blast that informs patrons of half-price discounts on a weekly basis. All half-price ticket sales are processed through the BosTix website or booth. Sales are reconciled following the conclusion of the events being offered. Research on the organization’s end of the BosTix process was collected from Wheelock Family Theatre, American Repertory Theater, and Huntington Theatre Company. Since 1981, Wheelock Family Theatre has been serving children and their families by offering an entertaining and affordable theatrical experience for audiences of all ages (Wheelock Family Theatre 2011). In association with Wheelock College, the theatre has produced 80 main stage productions over the past 32 seasons. Wheelock is the fourth largest theatre company in Boston and is the premier family theatre in the area. 11 American Repertory Theater (A.R.T.) is associated with Harvard University and has been ranked by Time magazine as one of the top regional theatres in the country (American Repertory Theater 2012). The artistic staff of the theater is highly involved with the university, teaching both undergrad and graduate-level classes throughout the school year. In its 32 year history, the company has focused on reinventing classic and contemporary works while also pushing boundaries with original works and premieres. A.R.T. is the recipient of numerous awards including the Tony Award and the Pulitzer Prize. Through a partnership with Boston University, Huntington Theatre Company aims to offer a range of productions from classical to original work while maintaining its dedication to professionally train up and coming artists (Huntington Theatre Company 2012). The company is producing eight shows this season, utilizing the 890-seat Boston University Theater as well as the Stanford Calderwood Pavilion at the Boston Center for the Arts Washington, D.C. The Cultural Alliance of Greater Washington, D.C. (CAGW) “convenes, supports, advocates and promotes arts and culture in the Metropolitan Washington, D.C. region (Cultural Alliance of Greater Washington n.d.). Organizational memberships are available to all arts and culture entities in the region that maintain 501(c)3 status. CAGW offers marketing services, professional development, and networking opportunities. 12 The alliance offers two outlets in which members can promote their upcoming programming. Culture Capital is a website that is viewed 40,000 times per month and offers information on a variety of entertainment and cultural experiences in the area (Culture Capitol 2012). CAGW also offers the use of TICKETPLACE—an online and in-person half-price ticket program in which members can sell their tickets at a discount. TICKETPLACE also sends an email blast four times a week to all subscribing patrons, enabling member organizations to reach a wide variety of patrons throughout the region (TICKETPLACE 2011). Though tickets can be purchased through the website, TICKETPLACE also has a retail outlet located in northwest Washington, D.C. A certain number of tickets are allotted from the participating organizations and given to TICKETPLACE to sell. Similar to BOSTIX, Box Office sales are reconciled after the event. The three theatre companies interviewed from Washington, D.C. that use TICKETPLACE were the Keegan Theatre, Folger Shakespeare Theatre, and Arena Stage. The Keegan Theatre is an intimate company located in Arlington, Virginia that focuses on both Irish and American contemporary theatre. Keegan produces work for its local audience but has also been taking classic American plays on tour to Ireland each fall since 1999 (Keegan Theatre 2012). The 2012-13 season includes a wide range of seven plays and musicals from All My Sons by Arthur Miller to Terrance McNally and David Yazbeck’s The Full Monty. 13 The Folger Theatre is part of the Folger Shakespeare Library, a research center devoted to the works of Shakespeare and the early modern west located on Capitol Hill (Folger Shakespeare Library n.d.). The library has a museum whose exhibits rotate three times a year, and also offers many public programs including the theatre company, consort series, Penn/Faulkner literary series and educational services. Focusing on Shakespeare and other Classical works, the Folger Theatre has been producing a three-play season since 1992 and in 2012 added a fourth play to their season. Performances take place in the Folger’s Elizabethan Theatre which “evokes the courtyard of an English Renaissance inn” (Folger Shakespeare Library n.d.). Just settling in from a recent move to the Mead Center for the Arts, Arena Stage is thriving as the “largest theater in the country dedicated to American Voices (Arena Stage 2012).” Since 1950, Arena Stage has been dedicated to presenting classics, contemporary, and new theatrical works as one of the first non-profit arts organizations in the United States. The company serves over 300,000 audience members each year in one of its three theatres: The Fichandler Stage which is a four sided auditorium that seats 683; the Kreeger Theatre which seats 514; and the Kogod Cradle, a more intimate space that seats 200. Arena Stage has had 17 productions that have gone on to Broadway, including 33 Variations, The Great White Hope, A History of the American Film, and Next to Normal. 14 METHODS Data for this analysis was collected directly from staff members of each alliance and the theatre companies that are members of those alliances. Since this analysis focuses on ticket sales, the main point of contact was the primary organizer of ticket sales and/or marketing decisions. In-person and telephone interviews were conducted with each company. The contact from each alliance was asked the same questions, and a different set were asked of the theatre companies, to maintain consistency throughout the data collection process. The interviews focused on: the purposes behind offering ticket discounts, the timeframe in which discounts are offered, and the frequency in which discounts are used. Throughout the course of this research, all participating organizations and their staff were completely informed of the study’s intentions and research methodology. All pertinent information collected during the process has been used unless otherwise requested that it not be by the participating organization. Certain information collected was not relevant for the topic of half-price ticketing and was therefore excluded. This will be noted throughout the analysis, depending on its relevance to the overall findings. As previously stated, there are many positive and negative perceptions regarding ticket discounts and whether they can lead to audience retention. This paper’s analysis will attempt to reveal the factors that impact this relationship in 15 understand its effect on the future of audience development and retention, as well as organizational sustainability. Throughout the course of this analysis, more examples of strategic ticketing discounts are introduced. The findings collected from those interviewed will presumably localize the most effective practices and ideas that arts organizations should consider in determining the most practical ways to offer discounted tickets. 16 CHAPTER TWO- THE HALF-PRICE PROGRAM The following chapter will discuss similarities and differences found between the half-price programs at the cultural alliances. It will analyze positive and negative aspects of each program and offer additional commentary regarding each topic. This examination will be pertinent for understanding the discounting and audience retention strategies used by the theatre companies researched which is fully addressed in Chapter 2. The initial similarity found between GPCA, ArtsBoston, and CAGW is that each developed a discount ticketing program inspired by New York City’s TKTS booth—a discount ticketing program formed by the Theatre Development Fund (TDF) in 1973 (Theatre Development Fund 2012). Each cultural alliance manages a similar half-price ticketing program with the intention of exposing new audiences to their area’s arts and culture organizations. Through the use of walkup booths, online ticketing services, and email promotion, the alliances sell discounted tickets to select performances throughout the year. Though created at different times, it is likely that the alliances were inspired by TDF’s mission to “enable diverse audiences to attend live theatre and dance in all their venues” since that is what each strives to do through their own discounting program (Theatre Development Fund 2012). 17 ArtsBoston and TICKETPLACE employ half-price ticket booths as well as advanced sales online. Falk explained that at ArtsBoston’s booths, patrons can only purchase tickets for performances occurring that day. Their booths are visited mostly by tourists and walk-by traffic. Day-of ticket sales are sold through BosTix and advanced sales are sold through ArtsBoston. Cuppo explained TICKETPLACE’s booths sell day-of and advanced sales. All three programs market heavily to their half-price buyers through email. E-blasts are sent each week in order to advertise new shows that are available for purchase. TICKETPLACE reaches over 8,000 people four times a week through their e-club while ArtsBoston reaches around 50,000. TICKETPLACE and ArtsBoston both have their own websites in which patrons can purchase half-price tickets for performances in advance. Falk also noted that ArtsBoston uses social media regularly to spread the word about performances. While Funsavers follows a half-price focus similar to ArtsBoston and TICKETPLACE, its discounting structure has a very unique approach. Funsavers is strictly a “permission-based email that provides consumers with last minute offers of half-price tickets to entertainment events for the upcoming week” (Greater Philadelphia Cultural Alliance 2012). According to Gafgen, the Funsavers e-club reaches over 100,000 members of the greater Philadelphia community each week. Unlike BosTix and TICKETPLACE, Funsavers does not manage ticket sales for arts and culture organizations. In an email sent every 18 Thursday, each participating organization will supply a promotional code for the specific performance being offered. Patrons interested in buying tickets must contact the organization’s box office directly or purchase through the venue’s website with the promotional code to receive the half-price discounts. Though a much more simplistic system, Funsavers half-price program is an excellent way for organizations to offer discounts without exchanging inventory or needing to reconcile financial revenue. Some arts and culture organizations offer tickets to all performances throughout a given season while others choose specific performances based on seating availability. Regardless of which performances are being offered, the halfprice model remains consistent for each cultural alliance, providing an easily maintained system for member companies to use. Charles Baldwin of Wheelock and Annie Immediata of the Folger Theatre suggest that many patrons adapt quickly to the consistency of an organization’s discounting program. This can be a positive aspect of half-price programs that patrons know how and when to buy tickets. It can also pose a negative result for organizations that always offer halfprice tickets as certain patrons learn to wait for the discounts. Many of the organizations interviewed including Wheelock and Huntington Theatre Company claimed that the benefit of purchasing full-price in advance as a subscriber or single ticket buyer is they can choose their desired day, time, and seats—a luxury that is not necessarily available with half-price tickets 19 One of the major benefits of the half-price program is that all three cultural alliances provide the service to members free of charge (aside from annual dues). Funsavers and TICKETPLACE offer their half-price programs to non-members but charge a small fee to do so. ArtsBoston only offers half-price tickets to members though Falk mentioned that non-members are allowed to post events on the website’s performance calendar. Another benefit is that all ticketing revenue generated by ArtsBoston and TICKETPLACE is given back to the companies. There is a small service fee added to tickets purchased through these outlets charged by the alliance in order to support the booth and online ticketing website. Daily deals such as Groupon and Living Social require a percentage of revenue generated (Groupon, Inc. 2011). Receiving the entire 50% from the half-price programs gives organizations more revenue when their discounting which offers greater sustainability for the future. All three cultural alliances offer exclusive benefits through their half-price programs that are more accessible and profitable for their members. Each program provides flexibility for their members when determining how many tickets to sell, which performances to offer, and where to seat their half-price patrons. Philadelphia members have the benefit of gaining access to their Funsavers ticket buyers since they are doing processing sales in-house. This also provides the opportunity for patrons to be marketed to for future performances and to track 20 their performance history. One of the biggest issues that Washington, D.C. and Boston-based organizations had with their alliance’s program was the ability to gain access to these patrons’ contact information in order to track their buying activity. This topic will be addressed further in Chapter Three. 21 CHAPTER THREE- THE THEATRE COMPANIES’ USAGE OF THE HALFPRICE PROGRAM After analyzing the programs offered by the cultural alliances in each city, it was essential to learn how their constituents were utilizing their organization’s services. Though the primary focus of the research initially centered on audience development and retention, as well as on future sustainability of the organization, it quickly became apparent that there are many factors that influence these outcomes. The questions asked in each interview represented significant influences in determining how and when to offer half-price tickets and how to further a relationship with the patron after they’ve engaged with the organization. For the following chapter, the most efficient way to break down all the information gathered is to review each question and analyze how the theatre companies handled each aspect of discounting. An interview was also conducted with Stephen Roth, the Executive Director of The Pricing Institute to provide significant insight into the topics being discussed. The Pricing Institute helps organizations focus on increasing ticket revenue by optimizing attendance. What are the organization’s goals when offering half-price tickets? This question offered the most variety when interviewing each theatre company. Some organizations have one purpose when offering discounts while others seemed to fall into multiple categories, using the half-price program to 22 satisfy various purposes. The most popular categories organizations fall into are: offering tickets for performance dates and times where there is less demand; utilizing the program for marketing purposes; and using the half-price program to maintain a mission of affordability. The most common reason organizations tend to use the half-price programs is the need to fill the house. Flashpoint, Bristol Riverside, Keegan, and the Folger all tend to gravitate towards offering half-price tickets solely when a particular show or performance date is not selling well. Depending on the halfprice programs, organizations will offer tickets when they feel it is necessary to give sales a boost. For ArtsBoston and TICKETPLACE, companies have the ability to decrease half-price availability if full-price ticket sales begin to increase. Since Funsavers promotions are offered the week-of, these discounts are always available on a last-minute basis. Walnut Street and ART utilize the half-price program for the same reasons, yet do so more sporadically. Both of these organizations have internal discounts for every performance already in place; Walnut Street has a limited number of $10 tickets available for each performance and ART offers a similar program for $25 tickets. Offering too many half-price tickets on top of the discounted tickets offered for each performance could confuse patrons and devalue the experience. When these organizations decide to use the half-price program it has to be for a very specific performance. Ralph Weeks, the marketing 23 director for Walnut Street, explained that they will only offer discounts for performances that fall close to holidays such as New Year’s Eve or July 5. When patrons see the performance listed on Funsavers for that given day, they will think that the discount is only being given because it is New Year’s Eve or the day after Independence Day, not because the production is not selling well. Jared Fine from ART uses ArtsBoston’s program similarly for less popular performance times such as those on a Sunday or Monday evening or a Wednesday Matinee. These theatre companies also use the half-price program for marketing purposes. Fine explains that by offering half-price tickets through ArtsBoston for less popular performances, they are able to promote the less popular show time to new audiences. Walnut Street is also utilizing Funsavers as a means of marketing to a broader audience, but they are doing so through banner advertisements in the weekly emails sent to GPCA’s email club. Charles Baldwin said that Wheelock Theatre Company is part of ArtsBoston Jr, a similar program for events geared towards children and families which enables them to market their performances to a specific segment. Some of the theatre companies interviewed offer half-price tickets for every performance to maintain their mission of affordability. Huntington Theatre Company marketing staff Temple Gill and Meredith Mastroianni explained that they do not want cost of tickets to keep a patron away. With an 890 seat house, it is difficult to sell all tickets to a performance so the organization offers advance 24 and day-of tickets through ArtsBoston. Tickets go on sale in August for the entire year, but selling only two weeks’ of performances instead of an entire run. As the season continues, they can adjust the number of half-price tickets through ArtsBoston based on availability in the house. Wheelock offers half-price tickets to every performance. They want to make their art available to everyone in the Boston community regardless of cost. The half-price program allows them to offer tickets at an affordable price without dropping the cost of all full-price tickets and devaluing the artistic product. ArtsBoston allows them to have a discount program similar to ART’s $25 tickets and Walnut Street’s $10 program. What type of tickets are offered through the half-price program? All organizations offer single tickets to their regular season productions through their cultural alliance’s half-price program. Bristol Riverside and Wheelock were the only organizations that offer tickets for special events, whether it is a rental or collaboration with another company. Funsavers offers a one-time half-price subscription purchasing opportunity at the beginning of each season for its members to utilize. Half-price subscriptions have been offered for the past few years with great success. Flashpoint used to take advantage of this opportunity, but have since developed a discount package called “FlashPasses” that serve as a subscription but is not available through Funsavers. Bristol Riverside Theatre and Walnut Street both take advantage of the half-price 25 subscription offering. Weeks explains Walnut already has discounted packages available so offering the subscriptions through Funsavers allows them to increase visibility. Do you take any precautions as to not upset full-price single ticket and subscription buyers? In regards to the question of taking precautions in order to not upset patrons who are purchasing full-price tickets, the results were mixed. Some organizations claimed they don’t feel the need to take precautions. Bristol Riverside Theatre’s Audience Coordinator Rayna Williams explained that the Box Office has received calls from upset patrons in the past. They will have received the email from Funsavers and discover the performance for which they already have tickets was being discounted. If patrons have purchased tickets in advanced, the box office cannot refund due the organization’s ticketing policy. If it was a same day purchase, the box office will make an exception and refund the difference. ART makes its $25 tickets available to all patrons and most are aware of this before buying tickets at full-price. ART also tends to only offer half-price tickets to performances that are already less expensive and may not be a popular time or day of the week. Flashpoint only offers 20 tickets through Funsavers each week to make more tickets available to subscribers and single ticket patrons. 26 Others believe they are taking precautions through the benefits their patrons receive by being subscribers and single ticket buyers. For example, Huntington Theatre Company, Walnut Street, and Arena all explained that by subscribing, patrons are able to decide the specific dates they want to attend and always get the best seats. All three of these companies utilize dynamic pricing, raising the price of tickets based on selling patterns and popularity. Subscribers that purchase in advance are typically getting a subscriber discount on the initial singleticket price before it is raised. Due to production popularity, some theatre companies may only offer half-price tickets in advance or for the first few weeks of a run. There is no guarantee that tickets will be available when patrons want them. Some organizations claimed they did not take precautions. However, offering subscriber benefits or only offering half-price tickets to specific performances that aren’t selling well is a form of taking a precaution that they may not have realized they were taking. Are you implementing any methods of tracking audience retention? One of the most important topics addressed in the interview is specific methods theatre companies are using to track audience retention. When providing tickets at a discounted rate, it can be beneficial to know if patrons are first-time buyers, returning half-price buyers, or prior half-price buyers that are converting into full-price single ticket or subscription buyers. At this time, most of the theatre companies are not tracking this information. Wheelock explained they are not receiving the patron information from ArtsBoston which is why they are not 27 tracking patron buying behavior. Walnut Street issues so few half-price subscriptions and single tickets that it is not worth the time and effort to track these patrons. Bristol Riverside Theatre used to track their patrons buying history but realized that so many patrons continued to buy through Funsavers that they didn’t feel the need to track these patrons if they weren’t going to convert. Some companies are dedicated to tracking their patrons and soliciting them for future ticket purchases. Though organizations that sell through ArtsBoston and BosTix do not receive the patron’s contact information, Hungtinton Theatre Company attempts to collect the data from the patrons directly. Gill and Mastroianni explained that each patron who purchases through the cultural alliance’s program has a note on their seat when they arrive, welcoming them to the performance. Within the welcome package, there is an option for patrons to return a form with their contact information so they can be contacted regarding future opportunities. To encourage patrons to fill out the form, the company offers a piece of candy as an incentive. They did, however, stop sending acquisition letters to half-price ticket buyers as they learned it wasn’t translating into single ticket or subscription sales. The organization is pleased with the revenue generated from patrons purchasing through ArtsBoston and BosTix. During the 2011-12 season, Huntington Theatre Company made $43,000 in ArtsBoston advanced sales and $27,000 with BosTix day of sales. 28 Other discount ticketing programs being used: At the beginning of this analysis, various discounting strategies being used by performing arts organizations were discussed. When interviewing each theatre company, it was important to learn other external discounting programs and strategies they were using to reach their audiences in order to gauge best practices. Though many of the theatre companies used outside programs, most preferred to use the cultural alliance’s program. A few of the theatre companies have experience working with daily deal sites such as Groupon, Travel Zoo, and Living Social. Fine of ART, however, feels they are not financially valuable since they take such a high percentage of revenue as does Gill and Mastroianni of Huntington. Ralph Weeks of Walnut Street agreed that the daily deal sites are not the best discounting option for their company because it makes the show seem like a one-time event instead of on opportunity to build a relationship with a local organization. The cultural alliance program reaches a local market and, most importantly, people interested in the arts. Almost every organization interviewed has used Goldstar to sell half-price tickets. Goldstar is an online ticketing website that aims to expose entertainmentbased organizations to new audiences and fill unsold seats by selling inventory 50% off (Goldstar 2012). ART and Wheelock both report positive experiences with Goldstar. Baldwin explained that for some reason they have better success 29 selling evening performances through Goldstar than they do through ArtsBoston or Bostix. Fine has also had success with Goldstar but claimed it felt like a fire sale. One primary issue reported by users was they do not receive patron information from Goldstar so this can make it challenging to market these buyers in the future. Arena Stage, on the other hand, has had such success selling through Goldstar that they actually stopped using TICKETPLACE a few years ago and sell all discounted tickets through this program. Chad Bauman, Associate Executive Director at Arena Stage explained that their main reason for discounting was to encourage advanced ticket buying and provide access to certain demographics. While many organizations tend to sell their full-price tickets first and then offer discounts if needed, Arena Stage puts discounts on sale through Goldstar three to four months in advance and then either sells out of those tickets or takes them off sale. Through this strategy, Arena Stage taught their audiences that if they want the discount, they have to purchase in advance. Most theatre companies agreed, however, that offering tickets through their alliances’ programs was the best option. Not only are these companies guaranteed the full 50% in revenue, but many claimed that they are reaching the best suited market of local arts participators through this outlet. Wheelock, among other companies, preferred working with the cultural alliance because of the personable nature and relationship associated with the program. 30 Pros and Cons to using the half-price program: Throughout the course of this analysis, many pros and cons came to light in regards to discounting through the cultural alliance’s program. As Ralph Weeks of Walnut Street explained, using Funsavers does sell tickets for their company which is a definite bonus. Gill and Mastroianni from Huntington pointed out that selling advanced and day-of sales through ArtsBoston makes a significant amount of money throughout a season. Even ART’s Fine who doesn’t use ArtsBoston’s services as frequently finds the service provided by the alliance as a significant resource for his company. He reveals the organization is solely dedicated to the promotion of the arts without trying to capitalize on it, which reigns true to all three alliances since none collect money from their member organizations for their discount services. Fine would rather use ArtsBoston than any other discounting program because of the way they take care of their members and maintain the mission of the program. For a theatre company like the Folger Theatre, which is a branch of the renowned Shakespeare research center and museum, promoting through TICKETPLACE exposes new patrons to all aspects of the organization. Audiences may be inspired to come back and visit the latest exhibit at the museum or buy tickets to one of the consort performances. Immediata adds that TICKETPLACE is a really valuable organization to all Washington, D.C. area theatres and a great way for them to reach new patrons. Steven Roth of the Pricing 31 Institute explained that at what a patron believes to be an appropriate price, organizations can gain constituents that may not have otherwise purchased a ticket. Noah Herman from Flashpoint also notes that working with Funsavers gives the organization many opportunities to advertise to diverse segments and potentially convert these half-price patrons into full-price single ticket buyers and subscribers. Herman also reported, however, that conversions into full-price buying habits rarely happen. “Instead, Patrons who buy discounted tickets through Funsavers tend to wait for more discounts to be offered in the future as opposed to buying full-price tickets or subscribing. This lack of advanced sale forces our hand into advertising on Funsavers more frequently than we would like, which is bad for full-price ticket income and, ultimately, bad for our earned income as a whole.” This issue leads into the negative features of using the half-price programs. Transitioning back to Arena Stage’s recent switch to Goldstar— it was enlightening to learn about the reasons the organization stopped using TICKETPLACE’s services. Bauman felt that TICKETPLACE is a great outlet for small to midsize companies, but it cannot handle the capacity of a large organization. For Arena Stage, TICKETPLACE did not have the ability to reach the number of people that they needed to, while Goldstar does, as they work with over 4,000 venues nationwide (Goldstar 2012). After selling most of their half- 32 price inventory with Goldstar and only a small portion through TICKETPLACE, it made sense for the organization to partner exclusively with the former. Another issue that was reported from multiple sources is that offering halfprice discounts is training patrons to always wait for a discount to be available before purchasing. Adams of Bristol Riverside explained that patrons are calling the box office asking for Funsavers discounts before the weekly offers have gone out to the public. Baldwin of Wheelock agreed that he has noticed patrons waiting for a discount as well. Roth explains that the discounts have to work for the theatre company as the ultimate goal is encouraging those patrons to come back. Some theatre companies have accepted the fact that their half-price patrons are going to stay half-price patrons. However, if that is not the company’s goal when offering discounted tickets, they may need to re-evaluate the implementation and the frequency of their discounts. 33 CONCLUSION Throughout this analysis, varied ideas around the topic of discounting tickets by performing arts organizations have been discussed. Of the theatre companies interviewed, many experienced very positive results with their discounting endeavors while others had more negative aspects to share. The most consistent pattern recognized by the theatre companies that seemed more satisfied with their outcome was that they made very specific choices with their discounting implementation and have maintained the same choices. Both Huntington Theatre Company and Wheelock offer half-price tickets to every single performance. They may add or pull back their inventory based on availability but they always offer half-price tickets and both reported very positive feedback regarding their results and their experience working with ArtsBoston. ART and Walnut Street Theatre have their own internal discounting programs and only use the cultural alliance program when it is truly necessary. Both companies gave examples of only offering half-price discounts for a performance on a holiday or at an unpopular show time when the ultimate goal was to fill seats. Roth explains that discounts make sense when they are appropriate and necessary. They offer a means of balancing price and value. ART and Walnut Street perfectly represent this idea in that they only offer half-price discounts when it is absolutely necessary. The bonus is that they offer the 34 discounts so infrequently that their patrons do not become accustomed to only purchasing tickets at a discount like other organizations reported. Roth explained that 50% discounts can be dangerous in that they have become “too magic a number” and that it becomes “crack” that patrons cannot avoid. Going forward, all performing arts organizations that intend to offer discounted tickets must establish some form of structure or guidelines before starting and plan on sticking to it. This is not to say that organizations cannot change their plan; Arena Stage’s story of re-evaluating their relationship with TICKETPLACE is a perfect example of why it is necessary to change a discounting strategy. However, the most successful discounting programs throughout this analysis have a set list of guidelines to determine how and when they are going to offer discounted tickets. Again, to re-cite Roth, discounts have to work for the theatre company, not the patron. If an organization offers halfprice tickets when a show is simply not selling well, the patrons will begin to take advantage of the discounting process as noted in the analysis. An efficient way of evaluating the success of a discounting strategy is to track a patron’s buying behavior. As noted in this analysis, most organizations are not tracking this information. Though not all organization are able to obtain their half-price buyers contact information from the cultural alliances, some are still finding ways to collect their audience’s information and inputting it into their ticketing database. Many ticketing databases have the ability to label patrons with 35 various codes that inform the organization of their buying history. If a “half-price buyer” label is given to all of these patrons, it’s easy to run reports to see who is falling under this category. Investing time into this endeavor will not only enable organizations to evaluate their discounting strategies, but may also divulge information about their marketing and development strategies. Tracking this information is essentially a win-win for any organization that does it. Offering discounted tickets can provide performing arts organizations with an outlet to accomplish numerous goals. It allows them to reach new audiences, generate revenue that may not have generated through full-price sales, and learn about the buying behaviors of their patrons. As some organizations reported, it also allows them to maintain their mission of affordability. If organizations offer discounts at random and too frequently without set standards, this could result in erratic buying behaviors that may not generate revenue. Patrons may also learn to wait for discounts when they are able to pay the full single ticket price. However, if discounts are strategically implemented through a previously defined structure, organizations can manage the outcome of their discounting goals more effectively. 36 APPENDIX A All information was gathered through interviews conducted with employees at each cultural alliance and theatre company. The contacts for the cultural alliances include: 1. Steven Cuppo, Manager of TICKETPLACE 2. Jennifer Falk, Director of Marketing and Communications for ArtsBoston 3. Sarah Gafgen, Funsavers Coordinator at the GPCA. Washington, D.C. theatre company contacts include: 1. Annie Immediata, Assistant Box Office Manager at the Folger Theatre 2. Jeffry Klein, Keegan Theatre 3. Chad Bauman, Associate Executive Director for Arena Stage Boston theatre company contacts include: 1. Jared Fine, Marketing and Communications Manager at American Repertory Theater (ART) 2. Charles Baldwin, Director of Marketing and Operations at Wheelock Theatre Company 3. Meredith Mastroianni, Marketing Manager, and Temple Gill, Director of Marketing at Huntington Theatre Company 37 Philadelphia theatre company contacts include: 1. Noah Herman of Flashpoint Theatre Company 2. Rayna Adams, Audience Development Coordinator for Bristol Riverside Theatre 3. Ralph Weeks, Director of Marketing and Public Relations at the Walnut Street Theatre. An interview was also conducted with Steven Roth, President of The Pricing Institute for supplemental information about strategic discounting. 38 WORKS CITED Adams, Rayna, interview by Kristin Allard. Audience Development Coordinator, Bristol Riverside Theatre (March 7, 2012). Alliance for Audiences. "What, Me Discount? 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